Chapter 3 Exercise 2 2. Definitions of manufacturing concepts Interstate Manufac

Question

Chapter 3 Exercise 2

2. Definitions of manufacturing concepts

Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:

Materials and supplies used

Brass $75,000

Repair parts 16,000

Machine lubricants 9,000

Wages and salaries Machine operators 128,000

Production supervisors 64,000

Maintenance personnel 41,000

Other factory overhead Variable 35,000

Fixed 46,000

Sales commissions 20,000

Compute:

a. Total direct materials consumed

b. Total direct labor

c. Total prime cost

d. Total conversion cost

Explanation / Answer

a) direct materials consumed = 75000+16000+9000 = $100,000
b) direct labour = $128000
c) prime cost = $ 228000
d) conversion cost = $268000

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